Japan Walks A Solitary Path

TOKYO — Walk down any street in Tokyo and you'll see store after store carrying colorful, if often illogical, names in English.

There's the Life of Easy clothing store, the Let's Kiosk, the Goody grocery and the Geronimo Shot Bar. Many of these stores have one additional English-language sign in their windows: "Sale."

But go inside and you'll find stores that are totally Japanese, from wares to workers; no one speaks a word of English. English is chic in Japan these days, but its use is both superficial and misleading, a Western wrapping on a Japanese core.

So it is with the Japanese reaction to the perils and pressures of globalization. In its reach and focus, the Japanese economy may be the most global of them all, and the Japanese government and companies are reacting with phrases that sound familiar to Western ears.

But a closer examination shows that these phrases surround an extremely Japanese core. Japan, far from opening itself to the winds of global change, is battening down the hatches.

The bureaucracy, especially the powerful Ministry of Finance, retains control of the nation's budget and investment.

Some mass manufacturing is going overseas, but the high-value, high-profit manufacturing still stays at home.

Despite decades of protests by the U.S. and other governments, trade barriers still play a key role in keeping Japanese industry strong. Foreigners can easily penetrate the Japanese markets for Big Macs, clothes or videos, but imports of high-value manufactured items like machine tools still are strictly controlled.

The economy and its corporations still exist not for profits or shareholders but to preserve jobs and to keep Japan as independent as possible. An old boy network of interlocking companies and suppliers--not cost or quality--still dictates purchasing and procurement.

To this insular and very organized nation, globalization is a one-way street, with Japanese goods and investment flowing out but as little as possible coming back in.

Japan has always changed and adapted to external pressure, from the original "opening" by American warships in 1853 to the U.S. occupation after World War II. It is adapting again, taking on the trappings of Western economies but, like the stores with English-language names, not changing much inside.

Classical Western economists would call this approach a recipe for national poverty. But most Western experts living here think Japan not only will get by with it but also may win the race for global economic power.

"Westerners always underestimate Japanese single-mindedness and its focus on countering the laws of economics as we know them," said an American executive in Tokyo. "Is Japan riding for a fall? I don't think so."

Model for 21st Century?

The stakes are enormous. The rapidly industrializing countries of Asia--especially China--are watching closely. If Japan prospers, the Japanese model--protectionist, controlled, nationalistic, government-directed--will be the model for a part of the world that will dominate world trade and manufacturing in the 21st Century.

Japanese officials talk about their nation's recent four-year recession, about the death of its lifetime-employment tradition, about its growing imports, about its record unemployment levels, about the need for "deregulation," about the way that high labor costs are forcing it to export its manufacturing base to Southeast Asia, much as American companies have over the last 20 years.

Japan, they all say, "is at a crossroads."

But Japan over the years has come to more crossroads than a rural mail carrier. At each stage, its government and corporations have predicted disaster. Each time, it has emerged stronger than ever. It is indisputably the winner in the emerging global economy of the last 20 years and seems unlikely to stumble now.

"Japan didn't die after all," said a U.S. government official in Japan. "Can it survive now in a global economy? My guess is, it will. It will evolve and it will loosen its government controls moderately, but not so far that the government loses most of its ability to manipulate and influence the economy.

"And this will work, for the same reason as it has in the past."

The reality is that Japan, for all its hand-wringing, isn't doing so badly.

The "recession" was no real recession. National output didn't shrink, as it does in Western recessions. Instead, growth slowed to a crawl--1 percent or less a year. Now growth is booming again.

Japanese save some 15 percent of their salaries, compared with 4 percent in the U.S. The reasons vary--a shortage of credit cards, skimpy pensions for retirees, tax laws that encourage savings and discourage big spending. The result is a mammoth pool of money--about $2 trillion in savings at post offices alone, some $6 trillion altogether. This is 52 percent of all savings in the industrialized world and gives Japanese industry a terrific war chest.